Gas is much cheaper in Slovenia, so neighboring Friuli Venezia Giulia uses a discount at the pumps to keep customers on Italy’s side of the border.
(CN) — An Italian border region can continue giving its residents a discount at the fuel pump to keep them from cruising over to Slovenia to buy cheaper fuel, Europe’s highest court ruled on Thursday.
Since the late 1990s, motorists in the Italian region of Friuli Venezia Giulia have been buying fuel at a reduced price as part of a tax scheme to keep them from going across the border and buying gas sold at cheaper prices in Slovenia.
The European Commission, the European Union’s executive branch, demanded in 2008 Italy scrap the discount under the EU’s 2003 Energy Taxation Directive, which seeks to balance the price of fuels across the EU by setting minimum taxes. The directive is meant to prevent market distortions that could result from big differences in national tax systems.
Shooting down the commission’s arguments on Thursday, however, the European Court of Justice said the fuel discount in Friuli Venezia Giulia cannot be considered an illegal cut in excise taxes.
Under the scheme, the regional government refunds service stations for the discounted fuel they sell.
Italy argued that the discount is necessary because Friuli Venezia Giulia lacks fuel production and processing facilities, which makes fuel more expensive in the region. Also, the discount is good for the environment because it helps prevent motorists from driving long distances to Slovenia and neighboring Italian regions where gas is cheaper, Italy’s lawyers argued.
The court said the commission failed to show that the scheme results in a lowering of excise taxes, which are duties paid on goods that are manufactured and traded. In the EU, such duties are paid on alcohol, tobacco and energy.
Fabio Scoccimarro, a Friuli Venezia Giulia official overseeing the environment and energy, welcomed the ruling and said in a statement the fuel discount keeps tax revenues in the region and helps gas stations.
He added that “it has clear environmental benefits and helps citizens save money.”
Courthouse News reporter Cain Burdeau is based in the European Union.